Over the past six years, 22% of Millennials say they gave up on the idea of homeownership. At the same time, there is a growing interest in alternative real estate investments, including real estate syndication and crowdfunding, particularly from investors 40 and under.
So what’s going on? Why are Millennials ignoring the traditionally “safe” financial path to homeownership and opting for alternative real estate investments instead?
In this article, we’re going to explore the reasons Millennials are choosing syndication over homeownership. You might be surprised at how much sense this decision makes!
What Is Real Estate Syndication, Exactly?
Let’s do a quick intro to syndication for those who aren’t familiar with it or aren’t completely clear on its definition. Syndication is when investors pool funds to finance a specific real estate deal (anything from a house flip to a multi-family rental). The deal is professionally managed by a real estate sponsor who handles every aspect of the project on behalf of the investors.
You can think of syndication as a form of crowdfunding. While there are a few differences (mainly with the more formal ownership structure of syndication), the process is largely the same from the investor’s point of view.
5 Reasons Millennials Prefer Syndication Over Homeownership
Here are the top five reasons Millennials are flocking to crowdfunding and syndication rather than becoming homeowners.
1. Lower Upfront Costs and Fewer Financial Barriers
Over the last 40 years (so basically all of Millennials’ lives), home prices have dramatically outpaced income growth. Mortgage interest rates have also increased considerably since the turn of the millennium, increasing the cost of borrowing money to purchase a home.
With great credit and a 20% down payment, an average $425,000 home with a 6% 30-year mortgage costs around $2,400 per month (not including maintenance or HOA fees). And that’s only if you can come up with the $85,000 down payment plus around $15,000 in closing costs.
For a generation still drowning in student loan debt, this is often a non-starter.
Syndication, by contrast, allows investors to buy into a deal for as little as $10,000-$50,000 (depending on thesyndication platform). With Gatsby Investment, for example, you can buy into a $3.25 million multi-family development project for under $25,000.
2. Passive Income Without Landlord Responsibilities
Many Millennials are now busy working parents, with little time to invest in finding the right home, buying it, and maintaining it, let alone trying to tackle the responsibilities of being the landlord for a rental property.
Since syndication projects are handled by the sponsor, investors don’t have to scout properties, draft financial projections, oversee renovations/construction, or manage tenants. They simply place their syndication investment and check in on the progress as they like via an online dashboard.
3. Geographic Flexibility
Owning a home ties you to one place. And with many Millennials changing jobs every few years to secure advancement opportunities, or even opting for a digital nomad life of travel, the idea of being tethered to a single location just isn’t as appealing.
With syndication, you can invest in real estate without tying yourself to it. Not only does this provide more freedom of mobility, but it also allows you to take advantage of other regions, perhaps even out-of-state markets, that may have more opportunities than your local market.
4. Easy Access Through Digital Investing Platforms
Buying a house is a hassle. How many hours must you spend searching online listings, touring homes, making offers, and navigating escrow? It’s stressful, emotional, and just plain exhausting.
Online investing is the opposite. Real estate crowdfunding and syndication platforms make it easy to review pre-vetted deals, sign documents, and monitor returns, all from a smartphone or laptop. This tech-enabled convenience matches the way Millennials already manage their finances as digital natives who are comfortable navigating online marketplaces.
5. Strategic Wealth Building and Tax Advantages with an Easy Exit
Syndication projects take advantage of tax benefits, often leveraging depreciation, qualified deductions, and lower capital gains rates to build wealth tax-efficiently. Some syndication platforms (like Gatsby) even accept investments through retirement accounts for added tax advantages.
Sure, as a homeowner, you can access many of these same tax benefits. But do you know what you typically can’t do as a homeowner? Liquidate your tax-advantaged real estate without a lot of time and trouble. Selling a home typically requires 2-6 months (from starting the listing process through closing), and that’s after holding the property for long enough to at least break even on the sale (around 10 years for those buying in 2025).
Syndication projects, on the other hand, have planned exit points. If you invest in a new development built-to-sell, for example, you’ll see an estimated timeframe upfront based on when the project is expected to be completed and sold (18-24 months, for example). If you invest in a long-term rental, your sponsor might offer cash-out opportunities at predetermined intervals (perhaps every five years).
This exit strategy makes it easier to plan your financial future while enjoying the tax advantages of real estate investing.
Invest in Real Estate Syndication with Gatsby Investment
Are you ready to invest in syndication (or do you know someone else who might be)? Gatsby Investment would be honored to help you get started!
With a solid track record of strong returns, a strategic niche, and an experienced team of investment experts at your service, you can invest with confidence.